Tumblr’s sale to Yahoo! comes just in time for the New York City-founded startup — investors and staff at the six-year-old blogging site were getting restless as the company failed to make money fast enough.
Now, Tumblr founder David Karp, who agreed to sell the company to Yahoo! for $1.1 billion cash, doesn’t need to worry as much about his site not rolling in ad dollars.
Yahoo! CEO Marissa Mayer and the rest of the board of the Web portal approved the deal Sunday, and today the deal became official with Tumblr accepting.
Yahoo!, an early Web powerhouse, has suffered in recent years as it failed to succeed in social networks or mobile.
For Mayer, brought aboard from Google last year, the Tumblr deal, her largest, improves Yahoo!’s position in both areas.
Tumblr boasts heavy usage on its more than 100 million blogs, but only about $15 million in advertising money was spent there last year.
Tumblr investors, including early investors from New York City-based Union Square Venture and from Sequoia Capital, were hoping for higher revenue levels to justify the startup’s $800 million valuation, which it commanded in a funding round in 2011.
Tumblr has been struggling to turn itself into a real business, sources told The Post. Also, in recent months some of the 175 employees were getting nervous.
“There have been a lot of résumés coming from Tumblr,” a New York venture capital source told The Post, referring to employees there looking to abandon ship.
Tumblr didn’t have much choice but to find an exit like Yahoo! offered, sources said.
That might not be enough to appease the vocal Tumblr users, some of them prominent tech bloggers, who have revolted online, criticizing the sale to Yahoo!
Some people have tweeted Karp directly, begging him not to sell, fearing a loss of Tumblr’s independent credibility under the old-school Internet company’s yoke.
Yahoo! has promised to keep Tumblr operating largely as an independent operation, according to the AllThingsD news site, which first reported on the deal.
Entrepreneur Danielle Morrill yesterday wrote that while “employees hold onto the hope that the company will be valued on its ability to drive billions in revenue, the reality is that Tumblr didn’t pull it off in time. The vast majority of that potential was not realized.”
The $1.1 billion price would still be the biggest tech exit for a Big Apple-founded startup, according to CB Insights.